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If You Invested $1000 in Electronic Arts a Decade Ago, This is How Much It'd Be Worth Now

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How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in Electronic Arts (EA - Free Report) ten years ago? It may not have been easy to hold on to EA for all that time, but if you did, how much would your investment be worth today?

Electronic Arts' Business In-Depth

With that in mind, let's take a look at Electronic Arts' main business drivers.

Headquartered in Redwood City, CA, Electronic Arts is a leading developer, marketer, publisher and distributor of interactive games (video game software and content).

Electronic Arts, popularly known as EA, distributes its gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals — Origin and Play4Free.

EA games can be played on video consoles, personal computers, mobile devices, tablets and electronic readers. The company generates revenues from the sale of disk-based video game products (known as packaged goods), downloadable contents (DLCs), subscription, micro-transactions and advertising.

EA generated revenues of $5.54 billion in fiscal 2020, of which digital net revenues contributed 77.9% and the remaining were generated from packaged goods and others. 

Moreover, net revenues from live services comprised 50.8% of total net revenues in fiscal 2020.

The company operates in three divisions — EA Studios, Maxis and EA Mobile. EA Studios includes DICE (Sweden), EA Canada (Canada), Tiburon (the United States), BioWare (Canada and the United States) and Visceral (the United States).

EA faces substantial competition from console and personal computer game publishers and diversified media companies that include Sony, Microsoft, Nintendo, Activision Blizzard, Take-Two Interactive and Ubisoft. In the mobile and social gaming market, the company competes with Glu Mobile and Zynga.

Bottom Line

Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Electronic Arts a decade ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in May 2011 would be worth $7,040.63, or a gain of 604.06%, as of May 3, 2021, according to our calculations. This return excludes dividends but includes price appreciation.

The S&P 500 rose 206.63% and the price of gold increased 10.53% over the same time frame in comparison.

Going forward, analysts are expecting more upside for EA.

EA’s digital and live services revenues are expected to gain from portfolio strength on the back of franchises including Apex Legends, FIFA, Madden NFL and Star Wars. EA SPORTS titles along with Battlefield are some of its biggest franchises driving active player base. Moreover, EA has a strong slate of game releases for the rest of fiscal 2021 that are likely to boost its top-line growth. The availability of Madden NFL 21 and FIFA 21 on Xbox Series X|S and PlayStation 5 worldwide is a key catalyst. EA continues to benefit from spike in demand for video games due to coronavirus-induced social distancing norms. However, intensifying competition from Activision and Take-Two Interactive is a significant headwind. Notably, shares have underperformed the industry in the year to date period.

Over the past four weeks, shares have rallied 6.07%, and there have been 3 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.

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